bpost SA/NV

Earnings Release • Mar 8, 2017

Fourth quarter 2016 results

Analyst call

Koen Van Gerven, CEO Koen Beeckmans, CFO

Brussels – March 9, 2017

Investor presentation - Interim financial report 4Q16

Financial Calendar

More on corporate.bpost.be/investors

03.05.2017 (17:45 CET) Quarterly results 1Q17

10.05.2017 Ordinary General Meeting of Shareholders

15.05.2017 Ex-dividend date

17.05.2017 Payment date of the dividend 07.08.2017 (17:45 CET) Quarterly results 2Q17

08.11.2017 (17:45 CET) Quarterly results 3Q17

04.12.2017 (17:45 CET) Interim dividend 2017 announcement

07.12.2017 Ex-dividend date (interim dividend)

11.12.2017

Payment date of the interim dividend

Disclaimer

This presentation is based on information published by bpost in its Fourth Quarter 2016 Press Release and 2016 Annual Report, made available on March, 8th 2017 at 5.45pm CET on corporate.bpost.be/investors. This information forms regulated information as defined in the Royal Decree of 14 November 2007. The information in this document may include forwardlooking statements1, which are based on current expectations and projections of management about future events. By their nature, forward-looking statements are not guarantees of future performance and involve known and unknown risks, uncertainties, assumptions and other factors because they relate to events and depend on circumstances that will occur in the future whether or not outside the control of the Company. Such factors may cause actual results, performance or developments to differ materially from those expressed or implied by such forward-looking statements. Accordingly, no assurance is given that such forward-looking statements will prove to have been correct. They speak only as at the date of the Presentation and the Company undertakes no obligation to update these forward-looking statements contained herein to reflect actual results, changes in assumptions or changes in factors affecting these statements. This material is not intended as and does not constitute an offer to sell any securities or a solicitation of any offer to purchase any securities.

Highlights of 4Q16

Normalized revenues up 7.4%

• Excellent Parcels revenues and positive impact of consolidation of Ubiway (1 month) compensating Domestic Mail evolution

Underlying Domestic Mail volume decline

• Tough comparables for transactional and advertising mail against very strong 4Q15. Stable full year trend at -5.0%.

Excellent parcels performance driven by end of year sales

• Domestic: driven by e-commerce, very strong trend in the online C2C and first visible results of non-exclusive DPDHL B2C partnership; price/mix effect of -3.4%
• International: positive contribution from acquisitions, increase in flows from US, continued volume loss to China

Costs slightly down and well under control

• Productivity improvement of 6991 FTE & interims for the quarter

gross

Normalized EBITDA up € +4.4m € 141.5m

Proposed total dividend per share up 1.6% € 1.06 already paid in December 2016 and € 0.25 to be proposed at the Annual General Meeting in May 2017

¹ i.e. reported average increase of FTEs and interims is 675 including 1,375 additional FTEs and interims for higher parcels & solutions volumes, Deltamedia integration and new subsidiaries.

Highlights FY16 – Results in line with expectations

Normalized1, € million

Topic	Results		Last outlook for 2016
EBITDA	FY16: € 586.9m (+0.6%, + €	3.3m)	at least at the
EBIT	€ 496.5m (+0.4%, + € FY16:	2.1m)	same level as 2015
Domestic Mail	FY16: -5.0% (underlying volume)		Around -5%
Parcels	+17.1% (domestic volumes) FY16:		Double digit
Dividend	Total gross dividend of € Interim dividend already paid: € • • Final dividend of € 0.25 (+ €	1.31 per share proposed 1.06 (+ € 0.01) 0.01)	at least € 1.29

EBITDA uplift of € +4.4m driven by excellent parcels performance compensating domestic mail volume decline

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Normalized1, € million

Summary of key financials 4Q16

€ million

	Reported		1 Normalized
	4Q15	4Q16	4Q15	4Q16	% Δ
Total operating income (revenues)	669.0	690.7	642.9	690.7	7.4%	Gain from sale of
Operating expenses	505.8	549.2	505.8	549.2	8.6%	sizeable building
EBITDA	163.2	141.5	137.1	141.5	3.2%	€ 26.1m
Margin (%)	24.4%	20.5%	21.3%	20.5%
EBIT	139.1	118.0	113.0	118.0	4.5%
Margin (%)	20.8%	17.1%	17.6%	17.1%
Profit before tax	144.8	121.0	118.7	121.0	2.0%
Income tax expense	49.3	19.3	40.4	41.5
Net profit	95.6	101.7	78.3	79.5	1.5%	Positive tax impact
FCF	68.6	34.5	68.6	34.5	-	of Deltamedia
bpost S.A./N.V. net profit (BGAAP)	101.4	86.8	81.1	64.7	-20.3%	liquidation € 22.2m
Net Debt/ (Net cash), at 31 December	(549.5)		(492.7) (549.5) (492.7)		-10.3%

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Total operating income (revenues)

Normalized1, € million

		4Q15	SGEI	∆	4Q16	3 % ∆
	Transactional mail	253.4	-	-18.3	235.1	-7.2%
Domestic mail	Advertising mail	68.6	-	-2.4	66.2	-3.6%
	Press	76.9	3.4	-0.4	79.9	-0.5%
	Domestic parcels²	44.5	-	7.5	52.0	16.8%
Parcels	International parcels	51.3	-	13.1	64.4	25.6%
	Special logistics	2.2	-	-0.3	2.0	-11.7%
	International mail	48.4	-	-2.9	45.5	-6.0%
Additional sources	Value added services	25.2	-	0.3	25.5	1.2%
of revenues	Banking and financial	51.0	-1.6	0.5	49.9	1.0%
	Other (Incl. Ubiway)	27.7	-2.6	43.2	68.3	156.0%
	Corporate	-6.3	-	8.3	2.0	-
TOTAL		642.9	-0.8	48.6	690.7	7.6%

¹ Normalized figures are not audited

² Defined as domestic and Belgian in- and outbound

³ % ∆ excluding SGEI impact

FY16 domestic mail underlying volume trend in line with guidance at -5.0%

• Tough comparables for transactional (-4.7% 4Q15) and advertising mail (-1.2% 4Q15) against best quarter of 2015.
• Transactional: shift towards cheaper products and continued e-substitution
• Advertising: continued good performance in unaddressed; frontloaded spend in 2016 (more campaigns in 1H16 vs. 2H16) and phasing impact towards 1Q17 (due to timing of Christmas holiday).
• Press: periodicals keeping up well, low renewal rate on newspaper subscriptions contracted in 2H15.

	Reported					Underlying 1
	1Q16	2Q16	3Q16	4Q16	FY16	1Q16	2Q16	3Q16	4Q16	FY16
Transactional mail	-5.6%	-3.5%	-7.8%	-7.2%	-5.9%	-5.3%	-4.8%	-7.4%	-6.4%	-5.9%
Advertising mail	0.1%	-2.2%	-1.2%	-7.8%	-3.0%	0.1%	-2.2%	-1.2%	-7.8%	-3.0%
Press	-2.0%	-0.3%	-4.2%	-4.1%	-2.8%	-2.0%	-0.3%	-4.2%	-4.1%	-2.8%
Domestic Mail	-4.1%	-3.0%	-6.1%	-7.0%	-5.0%	-3.9%	-3.8%	-5.9%	-6.4%	-5.0%

Excellent domestic and international parcels performance driven by end of year sales

Additional sources of revenues driven by VAS and financial revenues

Costs (excluding Ubiway) slightly down and well under control

Operating expenses excl. depreciation and amortization, € million

• Excluding Ubiway, increase in transport costs is linked to growth in international parcels
• Average reported FTE & interim increase of 675 leading to € +9.2m higher costs, productivity improvement is 699.
• Favourable FTE mix of € -4.4m thanks to the recruitment of auxiliary postmen (€ -2.8m) and the reduction of management level FTE (€ -2.1m).
• Negative price effect of € +3.8m explained by salary indexation and new CLA partly offset by tax shift, lower layoff costs and lower provisions for bonuses.
• Positive settlement of social charges (€ -3.3m) partially offset by increase in employee benefit costs (€ +1.6m).
• Excluding Ubiway, mainly driven by decrease in third party (€ -2.2m), publicity (€ -2.2m), other services (€ -2.0m) and maintenance & repair costs (€ -1.7m), partly offset by increased consultancy costs (€ +1.5m)

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FCF generation mainly impacted by Ubiway acquisition

€ million	4Q15	4Q16	Delta
Cash flow from operating activities	+63.8	+123.5	+59.7
Cash flow from investing activities	+4.8	-89.0	-93.8
Operating free cash flow	+68.6	+34.5	-34.1
Financing activities	-219.1	-220.6	-1.4
Net cash movement	-150.6	-186.1	-35.5
Capex	-32.3	-42.0	-9.7

• Additional SGEI compensation following indexation in 4Q16: € +0.9m
• Alpha pay-outs € +7.4m lower than amount paid out in 4Q15
• Lower tax prepayment in 4Q16: € +20.0m
• bpost bank dividend received in 4Q15 (phasing): € -5.0m
• Excluding these elements:
• Results of operating activities: € +3.4m, in line with evolution of normalized EBITDA
• Working capital evolution: € +33.0m, mainly due to the phasing in Social Security payments (€ +29.3m)
• Lower proceeds from sale of buildings: € -30.5m (4Q15 includes sale of a major building for € 37.4m)
• Higher capex in 4Q16: € -9.7m
• Investment securities in 4Q16: € -12.0m
• Acquisition of the Polish subsidiary in 4Q15 (€ +2.7m) vs. Ubiway in 4Q16 (€ -39.9m, subject to changes) and first earn-out paid for Apple Express Canada in 4Q16 (€ -3.7m)
• Investment in the Citie digital platform in 4Q16 (€ -0.8m)

• Higher interim dividend in 4Q16: € -2.0m

¹ Operating free cash flow = cash flow from operating activities + cash flow from investing activities

Final gross dividend of € 0.25/share will be proposed to reach a total gross dividend payment of € 1.31/share

Based on the communicated dividend policy, taking into account the interim dividend paid and subject to Board and Shareholders' meeting approval

Dividend payment, € gross per share	EUR 0.25
Proposed final dividend	EUR 51.4m
Pay-out ratio	x 85%
bpost S.A./N.V. net profits after tax November to December 2016 (BGAAP)	EUR 60.4m
	Dividend
Total proposed dividend for 2016	EUR 1.31
Proposed final dividend payment (€, gross per share)	EUR 0.25
Interim dividend paid in December 2016 (€, gross per share)	EUR 1.06

Strong balance sheet structure

€ million

Dec 31, 2016 Dec 31, 2015

Dec 31, 2015 Dec 31, 2016

Outlook for 2017

Recurring EBITDA and dividend payment at the same level as 2016¹

Revenues

Overall slight increase driven by:

• Growth in domestic parcels: volume double digit, around -3% price/mix effect
• Continued growth in international parcels supported by newly acquired businesses
• Growing Ubiway Retail revenues
• Decrease in domestic mail²: volume between -5% and -6%, price increase small user basket uncertain

Operating expenses

Slight increase, driven by:

• Increase in transport cost (reflecting growth in International Parcels)
• Continued productivity improvements and optimized FTE mix
• Salary indexation expected as of July 2017
• Integration of acquired businesses
• Continued cost optimization

Capex

• Recurring and Vision 2020 investments ~€ 90m
• Business development investments: Ubiway < € 10m

¹ including acquisitions of FDM, Apple Express, Ubiway, DynaGroup, Parcify and de Buren

² 1Q17 will count 2 working days more, 2Q17 2 less, 3Q17 1 less on franking machines and 2 less on stamps and 4Q17 1 less on franking machines and 1 more on stamps vs. the same quarters of 2016.

Overall guidance 2016-2020 as issued at CMD on 15 November 2016

We confirm our long term ambition of at least € 620m¹ EBITDA by 2020

Revenue

Overall slight increase driven by:

• Growth in domestic parcels: volume +75% (vs. 2015), -2 to -3% price/mix effect
• Growth in international parcels: revenue x2 (vs. 2015)
• Decrease in domestic mail: volume up to -6%

Operating expenses

Slight increase, driven by:

• Increase in transport cost (reflecting growth in International)
• Up to 4% FTE & interim productivity increase p.a. at current scope
• Optimized FTE mix
• Integration of acquired businesses
• Inflation

Capex

• Further Vision 2020 investments in 2017-18: ~€ 90m p.a. excluding Ubiway capex
• Maintenance capex level in 2019-20: ~€ 60m p.a. excluding Ubiway capex

Maintenance of dividend policy

At least 85% pay-out of BGAAP net profit

M&A on top of overall 2020 EBITDA guidance

Accretive contribution supported by strong balance sheet. Any decision must be evaluated on 5 criteria

Appendix: Full year 2016 figures

Brussels – March 9, 2017

FY16

EBITDA increased € 3.3m thanks to strong parcels growth and cost savings

Normalized1, € million

€ +26.2m / +4.7%

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Summary of key financials FY16

€ million

	Reported		Normalized1
	FY15	FY16	FY15	FY16	% Δ	Gain from sale of
Total operating income (revenues)	2,433.7	2,425.2	2,407.6	2,425.2	0.7%	sizeable building € 26.1m
Operating expenses	1,878.5	1,838.4	1,824.0	1,838.4	0.8%
EBITDA	555.2	586.9	583.6	586.9	0.6%	Alpha social
Margin (%)	22.8%	24.2%	24.2%	24.2%		plan provision of € 54.5m
EBIT	466.1	496.5	494.4	496.5	0.4%
Margin (%)	19.2%	20.5%	20.5%	20.5%
Profit before tax	470.6	489.5	499.0	489.5	-1.9%	Positive tax
Income tax expense	161.4	143.2	170.9	165.4		impact of
Net profit	309.3	346.2	328.1	324.1	-1.2%	Deltamedia liquidation
FCF	315.9	193.9	315.9	193.9	-	€ 22.2m
bpost S.A./N.V. net profit (BGAAP)	287.7	308.7	303.6	286.5	-5.6%
Net Debt/ (Net cash), at 31 December	(549.5)		(492.7) (549.5) (492.7)		-10.3%

Total operating income (revenues)

Normalized1, € million

		FY15	SGEI	∆	FY16	3 % ∆
	Transactional mail	917.6	-	-44.3	873.3	-4.8%
Domestic mail	Advertising mail	250.9	-	-3.1	247.8	-1.2%
	Press	295.6	-2.5	0.1	293.2	0.0%
	Domestic parcels²	161.2	-	20.7	181.8	12.8%
Parcels	International parcels	170.0	-	19.5	189.5	11.5%
	Special logistics	9.6	-	-1.6	8.0	-16.3%
	International mail	175.7	-	-13.7	162.0	-7.8%
Additional sources	Value added services	96.2	-	6.8	103.1	7.1%
of revenues	Banking and financial	205.1	-10.3	-2.4	192.4	-1.2%
	Other (Incl. Ubiway)	112.0	-10.1	40.8	142.6	36.4%
	Corporate	13.7	-	17.7	31.4	129.4%
TOTAL		2,407.6	-22.9	40.5	2,425.2	1.7%

¹ Normalized figures are not audited

² Defined as domestic and Belgian in- and outbound

³ % ∆ excluding SGEI impact

Domestic mail underlying volume trend in line with guidance at -5.0%

• • Underlying volume decline at -5.0%.
• Transactional Mail: continued e-substitution and shift towards cheaper products
• Advertising Mail: significantly improved trend from -4.9% for FY15 to -3.0% driven by focus on growth segments. Advertising spend was front-loaded towards 1H16 due to Euro 2016 in June.
• Press: stable volume trend at -2.8%, identical to FY14 and FY15.

	Reported							Underlying 1
	1Q16	2Q16	3Q16	4Q16	FY16	1Q16	2Q16	3Q16	4Q16	FY16
Transactional mail	-5.6%	-3.5%	-7.8%	-7.2%	-5.9%	-5.3%	-4.8%	-7.4%	-6.4%	-5.9%
Advertising mail	0.1%	-2.2%	-1.2%	-7.8%	-3.0%	0.1%	-2.2%	-1.2%	-7.8%	-3.0%
Press	-2.0%	-0.3%	-4.2%	-4.1%	-2.8%	-2.0%	-0.3%	-4.2%	-4.1%	-2.8%
Domestic Mail	-4.1%	-3.0%	-6.1%	-7.0%	-5.0%	-3.9%	-3.8%	-5.9%	-6.4%	-5.0%

Accelerated domestic parcels growth and positive contribution from M&A in international parcels

Additional sources of revenues impacted by international mail, but partly compensated by growth in VAS

• Consolidated as of 1 December 2016
• Loss of wholesales business as a result of price increases to safeguard reasonable profit margins.
• Positive contribution of Speos (€ +2.8m) and solutions, mainly European licence plates (€ +1.2m), decoder swap (€ 1.2m) and Citydepot (€ 1.1m)
• Lower revenue from bpost bank savings accounts due to low interest rate environment, lower revenue from financial transactions managed on behalf of the Belgian State as well as lower volumes of financial transactions in post offices
• Mainly lower sales of retailer products (€ -1.8m) and decreasing volumes in philately (€ -0.4m)

Cost savings on track and delivering € 29.5m

Operating expenses excl. depreciation and amortization, normalized1, € million

• Excluding Ubiway, increase in transport costs is linked to growth in international parcels
• Average reported FTE & interim increase of 147 leading to € +5.7m higher costs, productivity improvement is 686.
• Favourable FTE mix of € -19.7m thanks to the recruitment of auxiliary postmen (€ -8.0m) and the reduction of management level FTE (€ -12.2m).
• Negative price effect of € +4.9m explained by salary indexation and new CLA partly offset by tax shift, lower layoff costs and lower provisions for bonuses.
• Positive settlement of social charges was higher in 2015 (€ +1.0m) and increase in employee benefit costs (€ +4.1m).
• Excluding Ubiway, decrease of all expenses except rental, consultancy and other goods
• Excluding Ubiway, positive evolution of provisions, mainly settlement on terminal dues; absence of last year's earn-out for Gout (€ -2.0m) and higher increase of recoverable VAT (from 14% in 2015 to ~19% in 2016) for 2016 expenses (€ -3.0m)

Operating free cash flow1 of € 193.9m in 2016

€ million	FY15	FY16	Delta
Cash flow from operating activities	+361.1	+352.6	-8.4
Cash flow from investing activities	-45.1	-158.7	-113.6
Operating free cash flow	+315.9	+193.9	-122.0
Financing activities	-263.8	-270.1	-6.3
Net cash movement	+52.1	-76.2	-128.4
Capex	-81.0	-85.0	-4.0

• Lower SGEI compensation: € -35.9m
• Alpha pay-outs: € -8.3m
• Terminal dues payment, mainly phasing as costs were booked in previous years in transport cost: € -16.8m
• bpost bank dividend received in 4Q15 (phasing): € -5.0m
• Lower tax prepayment: € +10.0m and lower income tax paid relating to previous years: € +21.1m
• Excluding these elements:
• Results of operating activities: € +16.1m
• Working capital evolution: € +10.3m
• Lower proceeds from sale of buildings: € -22.2m (FY15 included sale of a major building for € 37.4m)
• Higher capex: € -4.0m
• Investment securities in FY16: € -12.0m
• Acquisition of subsidiaries and earn-outs: € -75.4m
• Higher final and interim dividends: resp. € -4.0m and € -2.0m
• Dividend to minority interests: € -2.0m

Key contacts

Baudouin de Hepcée Director External Communication, Investor Relations & Public Affairs	• Email: baudouin.dehepcee@bpost.be • Direct: +32 (0) 2 276 22 28 Mobile: +32 (0) 476 49 69 58 • • Address: bpost, Centre Monnaie, 1000 Brussels, Belgium
Saskia Dheedene Manager Investor Relations	• Email: saskia.dheedene@bpost.be Direct: +32 (0) 2 276 76 43 • • Mobile: +32 (0) 477 92 23 43 • Address: bpost, Centre Monnaie, 1000 Brussels, Belgium

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